Environmental Protection Limited To Boost Steel Prices Or High In The Second Half Of The Operation?

Aug 29, 2017

Hebei Province Environmental Protection Department issued a "heavy pollution weather response in Hebei Province and heating season, the production of a special implementation plan", it is clear that Shijiazhuang, Tangshan, Handan and other key areas in this year's heating season steel production capacity of 50%, coking and other chemical enterprises to implement production control, the discharge of substandard orders to stop, the province's coking Enterprise limited production of about 30%.

Recently, the reporter learned that Hebei Province Environmental Protection Department issued the "Heavy pollution of the weather in Hebei Province and heating season peak production special Implementation Plan" (hereinafter referred to as "program"). It is clear that Shijiazhuang, Tangshan, Handan and other key areas in this year's heating season steel production capacity of 50%, coking and other chemical enterprises to implement production control, the discharge of substandard orders to stop, the province's coking Enterprise limited production of about 30%.

In the industry's view, the "plan" boosted the market for the second half of the steel price increase confidence. August 15, Lange Iron and Steel Research Center director Wangguoqing said, "Hebei Heating quarterly limiting the publication of the program, ' Steel ' the total ban and environmental protection inspectors to increase the accountability, and constantly boosted market confidence, steel price increases." However, the recent correction of steel prices is likely to continue for some time. ”

"In fact, August steel Price callback is a good thing, after all, in the off-season, if the follow-up callback in place, September, October may be improved." In November, the policy of restricting the supply will be tight, the market will rebound for a period of time, overall, the second half will still show the trend of more and less. ”

High running?

August 15, steel industry analyst Zeng Jieshe in an interview with reporters, said, "Although the steel price is now a correction, but will still be in a high shock state, is expected to be in the late four quarter steel prices will go further." ”

"The overall supply of the market is tight and the fundamentals are small, but prices have risen too fast in the short term," he told the news. From the macroscopic data, the first half of the demand obviously exceed expectations, the second half due to the real estate policy control, demand will slowly weaken, but the infrastructure needs are relatively stable. ”

In addition, this year's exports of electromechanical products also showed a growing trend. According to Customs export data, from January 2017 to May, China's exports of electromechanical products 3,370,360,000,000 yuan, the year-on-year growth of 14.2%, accounting for China's total exports of 57.3%.

At the same time, "Ban the ' steel ' effect is also very obvious, although the resulting market vacancy has not yet been filled, but in the follow-up will be a certain expansion, but slower than expected, supply is still tight." The second half of the steel price will still be in a high position, but then to increase the space is relatively small, after all, now rebar price per ton reached the profit level of more than 1000 yuan. "said Zeng Jieshe.

"Now the enterprise profit is also better, the supply will be appropriately increased, but there are uncertainties." "Zeng Jieshe said, the history of the largest scale of air pollution prevention and strengthening supervision action and the gradual implementation of the policy of restricting the winter, will make the start rate affected, resulting in insufficient supply, overall, supply-side compression will be relatively large. At the same time, the enterprise sewage permits are also being issued, the market inventory is not high.

In addition, the industry also believe that the second half of the increase in steel prices are mainly due to policy control, environmental protection production, the current interaction and other factors of the comprehensive role. Now the rebar price than before has risen 1500 yuan/ton above, this irrational rise, to the market is unfavorable. The lack of demand support after the rise in steel prices has the potential to risk a big pullback.

On the one hand, the state continues to increase the strength of steel to capacity. According to the National Development and Reform Commission statistics show, as of the end of May this year, the national steel to 42.39 million tons of capacity, has completed the total annual task of 84.8%, of which, the central enterprises in advance to complete the year to resolve the task. On the other hand, according to the requirements of the State, all localities increased the efforts of environmental protection, Beijing-Tianjin-Hebei and its surrounding areas of air pollution prevention and strengthening supervision action has achieved positive results, the fourth batch of central environmental protection Inspectors are also in order. In addition, since the beginning of this year, the futures market has been very active black products, pulling up the price of steel.

Recently, in response to the State Council's fourth major inspection found in individual areas "steel" enterprises are still in the wind, the State Council Prime Minister Li Keqiang made important instructions to outlaw "steel", to resolve the excess capacity to unswervingly advance to prevent resurgence. Against the wind to commit the crime should be firmly punished by law, the supervision of the weak to serious accountability, must do orders.

July 28, the National Development and Reform Commission, the Ministry of Industry Coordination inspector Shannon in the China Iron and Steel Industry Association five sessions of the six Standing Directors (enlarged) meeting, said that in August, the Inter-ministerial Conference organized a spot check group to the relevant places to ban "steel" special spot checks. "The August spot check is not a period of painting, the future will also establish a long-term mechanism, to resolutely prohibit the ' steel ' and prevent the ' steel ' to come into effect." Shannon stressed.

Although the heating season limited policy has not yet been implemented, but this year, environmental inspectors have been more and more serious. August 7, the fourth batch of central environmental protection inspectors fully activated, 8 central environmental protection inspectors have dispatched in Jilin, Zhejiang, Shandong, Hainan, Sichuan, Tibet, Qinghai, Xinjiang (including Bingtuan) to carry out supervision and emplacement work. According to the Ministry of Environmental Protection responsible for the introduction, the entire environmental protection inspectors are currently in a tense and orderly manner.

Wangguoqing said, "The recent environmental speculation more factors, market confidence, the futures market to see more, so that steel prices in a large-pulling process." But now in the off-season does not support the sharp pull of steel prices, steel market is currently in a weak balance, so I think the off-season callback is better. After November this year, with the heating quarterly limiting the real implementation of the policy, the market will rebound further. Overall, the second half of the steel market will still be tight balance between supply and demand, steel prices may be in a high concussion operating state. ”